Hospira 2Q profit plummets on quality control plan

(AP) — Hospira's second-quarter net income plummeted as the drug and device maker continued to address quality control problems, but the performance beat Wall Street expectations and shares jumped more than 6 percent.

It also reiterated its full-year adjusted earnings guidance of between $2 and $2.30 per share, but said earnings were likely to come in near the lower end of that range. Wall Street is expecting $2.11 per share.

The company posted a net loss of $2.5 million, or 2 cents per share, compared with a profit of $143.6 million, or 85 cents per share, in the same quarter last year, when Hospira had a strong launch of a generic cancer drug.

The company spent more than $32 million on restructuring and impairment charges in the quarter. Hospira's cost of products also sold climbed 15 percent to $750 million in the quarter as it worked to improve regulatory compliance at its Rocky Mount, N.C., manufacturing facility. In April 2010, the Food and Drug Administration said the location's manufacturing processes did not comply with required standards.

Sales fell 2.9 percent to $1.03 billion for the quarter.

Excluding one-time events and charges, the company earned 51 cents per share. Analysts polled by FactSet expected earnings per share of 49 cents per share on revenue of $987.7 million.

Shares of Hospira Inc. rose $2.17 to $36.92.

"The quarter's performance reflected the impact of our quality-improvement initiatives, as well as a difficult comparison to strong second-quarter 2011 performance," said CEO F. Michael Ball. "During the quarter, we made progress with our remediation efforts and remain fully committed to reinforcing Hospira's foundation."